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Tuesday, October 22, 2013

By nature, humans are always looking for patterns. History shows us that is a good thing to do, as humans build and destroy along similar lines and habits. It isn't perfect though.It is comforting to think you have found a pattern that makes sense; from superstitious baseball players to people who have their "lucky shirt," but that feeling of comfort can lead you to miss a turn.The phrase give to Mark Twain, "History does not repeat itself, but it does rhyme." is just about right. A rhyme is almost the same, but the inflection, tone, and amplitude can be a bid different.In that light, static evaluation of especially China, but India as well, is full of dangers. Unlike the rising powers of the last few centuries, both have significant demographic headwinds to overcome. They are resource and institutionally restrained unlike any other rising power. While Western Europe deals with imploding demographics and collapse of their Welfare State model and America picks its belly button - it is easy to go all Eeyore and think the the future is East & South Asian ... but wait. It isn't that easy.Demographic, economic, environmental, political; those challenges for both India and China are significant, but there are more out there waiting.

The more I look around, the less I feel that any of our comfortable models are going to play out. The uncertainty is greater, and the capacity for sudden change grater than any of are really discounting for. When a nation faces such greatest challenges, it needs all its intellectual capital to find solutions and to lead the nation to the best path forward. What if a nation's best and brightest decide they don't want to show up to the future?

India’s biggest corporate beneficiaries of economic liberalization --names like Tata, Mahindra, Birla -- are putting the bulk of their investments abroad. Escaping rapidly declining educational institutes at home, more Indian students than ever before -- the number has risen 256 percent in the last decade to almost 200,000 -- have gone abroad, to Spain and China as well as the U.S., the U.K. and Australia. Young technology professionals and bright undergraduates are moving to Singapore, Australia and Silicon Valley. An influx of wealthy businessmen and financiers has made Indians the highest-income ethnic group in Singapore.

A similar quest for more congenial climes is apparent among China’s privileged classes. The country’s rapid economic growth was actually triggered in the late 1970s and 1980s by its far-flung and patriotic diaspora. But the New China they enabled is now a place -- environmentally challenged, and politically and economically unstable -- that many of its wealthy inhabitants hope to leave. A recent report by Bain & Co. revealed that an astonishing 60 percent of Chinese it surveyed with a net worth of $1.5 million or more wanted to emigrate, and a third of them already have investments abroad.
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What does this rush to the exit by their elites portend for India and China, two of Asia’s biggest nation-states, which not so long ago were widely expected to preside over a shift of power from the West to the East? This month in Hong Kong I met an old friend who had opened a business for rich consumers in China as early as the 1990s, and branched out into other realms, including culture. Having witnessed many ups and downs in previous decades, she imagined the presently diminished market for luxury goods in China was just another phase.
But she was worried about the long-term ramifications of the sociopolitical and economic uncertainty settling upon Chinese elites, and the consequent flight to the safety and security of other societies. Back in the 1990s, she had invested in the future of a class of educated, well-off Chinese -- its expansion, and the related growth of a sophisticated culture of consumption at home. Their departure from China, if not for good then with the intention of finding an additional base elsewhere, meant that she, too, had to find a haven elsewhere from the coming storms of Chinese life.

Theoretically, she could exercise her rights as a flexible citizen, and follow her clientele to flashy playgrounds of the rich such as Singapore, Hong Kong and Dubai. Indeed, these old hubs of transportation and commerce are reinventing themselves as high-class tax shelters and playgrounds for Asia’s plutocracy. But this is far from resolving the crisis of the nation-state, the original guarantor, in postcolonial India and China at least, of citizenship, rights, welfare and dignity -- a gathering crisis that will affect everyone invested in Asia’s political and economic stability.

One note - the author of this article, Pankaj Mishra, is pushing a book titled, From the Ruins of Empire: The Revolt Against the West and the Remaking of Asia, but that's OK - we like authors and books.Either way - plenty here to mix in to your pondering. Add this to your mix: as Europe's decline has yet to even hint at bottoming, and America seems intent on economically hobbling itself - there is a tendency to look to past patters and ask, "OK, which nations will rise to the top to replace them?"I China and India simply fail to thrive, plateau early, or simply fail to transition from boost to cruise - then what world do we have? Economically stagnant developed world, polluted, dry, sputtering, no-longer-developing - and corrupt tribalistic, failed quasi-nation states filling the gap except for the New Zealand, Singapore, and Norway here and there?Good googly moogly, anti-depressants for everyone.